Buying and selling
Islamic finance purchase
Buying a home with Sharia-compliant home finance, such as Ijara, Diminishing Musharaka or Murabaha, with your finance provider's own documents and part in the purchase handled alongside it.
Every cost on its own line: the law firm's legal fee, VAT, the searches and other third-party costs, and any property tax. Your quote opens as soon as you send the form.
Apply to your finance provider as early as you can. Islamic home finance has its own application, valuation and documents, and some providers work only with law firms on their own panel.
Islamic home finance lets you buy a home without a mortgage that charges interest. Instead, a finance provider takes part in the purchase under a Sharia-compliant plan: for example, it buys the home and leases it to you while you buy its share over time (Ijara with Diminishing Musharaka), or it buys the home and sells it to you at a higher, fixed price that you pay in instalments (Murabaha).
The conveyancing follows the same route as any purchase, with the provider's own documents, its part in who owns the home and its requirements built in. This service is for buying a freehold or leasehold home with Islamic finance in England, Wales or Northern Ireland. Our guide to buying with Islamic finance explains how the plans work.
The instant quote includes an Islamic finance admin fee for that extra work, at least £650 plus VAT (at least £780 including VAT), on its own line, as is the fee for acting for your provider. If you go ahead, Keyfolio introduces you to a regulated law firm on our panel.
What is involved
The steps follow any purchase, with your finance provider's part built in:
- Checks and funds: your identity and address, and where your deposit and the rest of your money come from, as for any purchase.
- Title and searches: checking the seller owns the home and can sell it, ordering the searches and raising enquiries with the seller.
- The provider's offer and documents: reviewing the offer and the documents for your plan, such as a lease and an agreement to buy the provider's share over time (Ijara with Diminishing Musharaka), or an agreement to buy the home from the provider at a fixed price paid in instalments (Murabaha), and explaining what you are signing.
- Who owns what: depending on the plan, the provider may own the home, or own it with you, until the end of the plan. Your conveyancer explains how your part is recorded and protected at HM Land Registry, or with Land and Property Services in Northern Ireland.
- Working with the provider: meeting its requirements and reporting to it, as a conveyancer does for a mortgage lender, and working with its own law firm where it has one.
- Report and exchange: a report to you on the title and the plan, then exchange of contracts, when the purchase becomes legally binding.
- Completion: the provider sends its money, the purchase completes and you collect the keys.
- After completion: filing the property tax return and registering the purchase.
What the legal fee covers
- Reviewing your finance provider's offer and the documents for your plan
- Explaining how your plan works, and what you are signing
- Checking the title, and ordering and reviewing the searches
- Meeting the provider's requirements, and working with its own law firm where it has one
- Reporting to you, and to your provider, on the title and the plan
- Exchanging contracts and completing on the agreed day
- Filing the property tax return and registering the purchase
Costs you may see on top
- The Islamic finance admin fee, at least £650 plus VAT (at least £780 including VAT), for the provider's documents and its part in the purchase
- A fee for acting for your finance provider
- The fees of the provider's own law firm, where it has one and asks you to pay them
- A leasehold admin fee if you are buying a flat
- Searches and HM Land Registry fees
- Stamp Duty Land Tax, or Land Transaction Tax in Wales
What to have ready
- Your finance provider's agreement in principle, then its offer
- Your provider's contact details, and the name of any law firm it uses
- Photo identification and proof of address for each buyer
- Evidence of your deposit and where the money came from
- The estate agent's memorandum of sale
- Any deadline you are working to, such as a move date
How long it takes
A purchase with Islamic home finance commonly takes 10 to 16 weeks for a freehold house, or 12 to 20 weeks for a leasehold flat, from instruction to completion. The provider's own steps can add time: its valuation, its offer and the documents for your plan, and, where it has a law firm of its own, the two firms working together. Applying early, and telling your conveyancer about any deadline at the start, keeps it moving.
Things to watch for
- Ask your provider at the start whether it works only with law firms on its own panel, or whether its own law firm will act for it, and whether you pay that firm's fees.
- Read how your plan's payments work: the rent on the provider's share, the payments that buy it, and what happens if you want to sell or pay early.
- Check what insurance the plan asks for, such as buildings insurance, and who arranges it.
- Keep your deposit, and the money that makes it up, in accounts you can show your conveyancer, as for any purchase.
Questions people ask
What is a home purchase plan?
A home purchase plan is Islamic home finance in which the provider buys the home, or a share of it, and you buy it from the provider over time while paying rent on the part you do not yet own. Ijara and Diminishing Musharaka plans work this way. Home purchase plans are regulated by the Financial Conduct Authority.
Will I pay stamp duty twice?
Not usually. Although the provider may buy the home first and then lease or sell it to you, relief for alternative property finance means Stamp Duty Land Tax, or Land Transaction Tax in Wales, is charged as it would be with a mortgage, as long as your plan meets its conditions. Your conveyancer checks that it does, and how first-time buyer relief or the higher rates apply to you. Use the stamp duty calculator for an estimate.
Why is there an Islamic finance admin fee?
Your conveyancer has more to do than with a mortgage: the provider's own documents for your plan, its part in who owns the home and its requirements. The fee for that work, at least £650 plus VAT (at least £780 including VAT), is on its own line in your quote, so you can see what it is for.
Can any conveyancer act for me?
Many providers ask that the conveyancer acting for you is on their panel, and some have a law firm of their own act for them. Check with your provider before you instruct anyone, and name your provider when you ask for your quote, so we can match you with a law firm that fits.
Who does the work
Your matter is handled by a law firm regulated by the Solicitors Regulation Authority, the Council for Licensed Conveyancers or CILEx Regulation, or in Northern Ireland by a solicitor regulated by the Law Society of Northern Ireland. At the moment the law firms on our panel act for property in England and Wales, so for property in Northern Ireland we tell you whether a firm can act for you before we pass your details to anyone. The firm confirms who will work on your file, their experience and its terms before you instruct it. How we choose our firms.
Helpful guides
The other costs of your move
- Stamp duty calculator: stamp duty in England and Northern Ireland, Land Transaction Tax in Wales
- Moving costs calculator: the other costs of the move, from the survey to removals